There are lots of factors that could upset your finances. Managing your finances properly despite the effect of these factors can be tough. With the proper strategy and execution, it can be done though. However, you have to beware of engaging in the acts listed below as they will mess your efforts up and send you back to the zero.
1. Having No Clue How Much You Spend
The first step to financial freedom is accountability. You must be able to account for every penny you spend. A lot of people spend a huge amount of money on ‘financial vices’. These are things that really could be avoided wasting money on if you realize how much you exhaust on them.
If you decide to track your spendings and debt, you will realize how much these ‘financial’ vices put your finances back and drag you into debt. These realizations are eye-opening and show you areas where you need to exercise prudence. If you have a hard time tracking how you spend money, there are some really good tools online that can help.
2. Not Using Debt to Your Advantage
The credit score system can be exploited to get your debt working for you. While some people will advise you to stay of loaning some credit and ask you to pay off your debt as soon as you can, always have it at the back of your mind that debt, if properly managed, can be to your own advantage.
You can build your credit score and be marked as a trustworthy borrower. You can divide your focus between paying to make regular debt payments and saving in an effort to meet your financial targets.
3. Spending or Borrowing Just Because You Can
This is probably one of the most stupid things to do with your money. Qualifying for a particular loan doesn’t necessarily mean you have to take the loan. Many people have taken students loan just to go to prestigious schools when it is absolutely unnecessary to do so. Some people do this just because of peer pressure and pressure from society. The college loan system is a convoluted one, you probably wouldn’t understand what you are getting into.
4. Not Planning Ahead — Way Ahead
We all fall into the traps of short-term thinking. It is easy to function day-to-day than a plan for the next couple of months or years. But that can cause a lot of problems for you in the long run. You have to start planning ahead.
There is a lot of planning ahead to be done with money so it is stupid if you don’t take this step. You have to consider saving for your children’s college funds, your retirement fund, and some others.
Also, there is estate planning to consider if even at a young age. Assets are important. You should acquire as much as you can. Make a checklist that you review yearly and improve your finances.
5. Going Along With What Your Friends Do
Different strokes for different folks. A system that works for a friend might not work for you. You have your own strengths and weaknesses. Different financial strategies work for different people. Only use a strategy that works for you. Don’t be surprised when your friend’s strategy only ends up increasing your debt.
Your strategy needs to meet your needs. This is where a lot of people get it wrong. Your friend’s needs and yours will definitely differ at some point. This might be crucial to your financial management strategy.
6. Letting Love Rule Your Wallet
A healthy relationship should make you financially responsible. Don’t let love blind you. Let the person you are dating understand the need for financial responsibility. Don’t think that blowing your money on a partner will make them love you. If you can’t afford a particular item, let them know.
If your relationship is built on money, it can even become financially abusive if the other partner starts leveraging on money as a means of control.
7. Refusing to Ask for Help
Staying close-mouthed about your financial predicaments has ever helped no one. If what you are doing isn’t working and you need help to stay on top of your finances, the least you could do is find out some information about solving your problems.
Go online, get a coach, apply to a financial institution as a client. Do what works for you. It might be all you need to turn your story around.
In conclusion, no one is an expert at avoiding all the pitfalls associated with finance management. What you should always do is avoid some of the stupidest acts that might damage your credit score and increase your debt.